Where your emotions can really get you into trouble
In one study, participants were shown one of three short video clips before being asked to make several choices between receiving cash today and larger amounts at points in the future, ranging from one week to six months. They were told that some of them would actually be given the rewards they chose, so they should choose carefully.
One of the videos depicted the death of a boy’s mentor, another concerned an unsanitary toilet, and the third was about the Great Barrier Reef.
Sad participants settled for $37 today rather than $85 in three months’ time, but neutral participants demanded $56 today to give up a claim the same future pay-out. The same phenomenon was evident in follow up studies.
For the most part, sad people, it seems, wanted to get a reward right now, even if it meant giving up much more money in the future.
We move into “present bias” when we want an immediate payoff — in the case of sadness we want to feel better — so we become impatient and ignore the greater benefits that come when we settle down and wait awhile.
You might, for instance, opt for a lump-sum payment today rather than a better pension down the road after a sudden job loss. But too much discounting of the future says more much about your emotional state, where you're behaving as if there's no tomorrow, than you may realize.
Do you think you've made some 'sad' decisions when it comes to money? Have things changed over time?By Gordon Powers, MSN Money